Smartkarma Daily Briefs

Mar 22

TMT: Razer Inc, Samsung Sds, Link Administration Holdings, Alibaba Group, Vanguard Intl Semiconductor, Xometry and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Caymans To Decapitate The Headcount
Samsung SDS Placement – Deal Is Very Well Flagged and the Stock Is Cheap, but It’s a Tough One
Link Admin (LNK AU): Scheme On Track as Proposal Emerges For RSS Business
US Expansion of Travel Bans the First Step in Broader Escalation?
Link’s Privatisation by DND on Track to Complete in June/July
Block Deal Sale of Samsung SDS by the Lee Family to Pay for Inheritance Taxes
Vanguard (5347.TT): We Think Vanguard Can Easily Reach 1Q22 Guidance.
Recent IPO Insights: Xometry

Caymans To Decapitate The Headcount

By David Blennerhassett

The Cayman Islands is seeking to eliminate the “headcount test” for Schemes of Arrangement.
Such an amendment will provide greater certainty for Hong Kong Schemes, wherein 59% of all listed companies are Cayman Islands incorporated.
This development arrives a tad late for Razer Inc (1337 HK), which is trading wide to terms, exactly on account of the fact it could potentially fail the headcount test.

Samsung SDS Placement – Deal Is Very Well Flagged and the Stock Is Cheap, but It’s a Tough One

Kookmin Bank Trust Department is looking to raise up to US$321m via selling 3.9% of Samsung SDS.
The deal appears to be very well flagged as the ultimate sellers are the Samsung family.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

Link Admin (LNK AU): Scheme On Track as Proposal Emerges For RSS Business

By David Blennerhassett

Link Administration Holdings (LNK AU) announced that all applications for regulatory approvals have been submitted. The Scheme explanatory booklet will be submitted to ASIC this week.
Separately, discussions with LCFH have not resulted in an agreement for the sale of Link’s BCM business. Additionally, a proposal from FNZ Group for the RSS business was rejected.
The ACCC and FCA approvals are the key risks to the deal completing.

US Expansion of Travel Bans the First Step in Broader Escalation?

The US just expanded travel bans against Chinese officials said to be repressing ethnic and religious minorities.
The timing, a few days after a Biden-Xi call on Russia that appeared to achieve little of substance is telling.
Noises out of the UK have been similarly aggressive here and the question now is how Europe responds.

Link’s Privatisation by DND on Track to Complete in June/July

By Arun George

Link Administration Holdings (LNK AU) notes that the Dye & Durham (DND) privatisation scheme remains on track for a June/July completion. Scheme document will be submitted to the ASIC shortly.
Link also noted that it was unable to reach a binding agreement with LC Financial Holding for the sale of the BCM business.
Key hurdles are ACCC clearance and the Woodford investigation. We would be buyers up to A$5.2 per share (implies 70% deal probability).

Block Deal Sale of Samsung SDS by the Lee Family to Pay for Inheritance Taxes

The Samsung Group owner Lee family wants to partially sell their stake in Samsung Sds worth 390 billion won in a block deal.
The block deal sale involves 3.02 million shares of Samsung SDS or 3.9% of outstanding shares.
We would avoid this block deal as the company may face continued overhang sale issue in the next 1-2 years.

Vanguard (5347.TT): We Think Vanguard Can Easily Reach 1Q22 Guidance.

By Patrick Liao

It’s NTD$4.976~5.176bn to go in March to reach the 1Q22 guidance of NTD$13.2~13.6bn.
Despite Consumer and Smartphone demands could be weak in 1Q because of seasonality, we still see the demands can be strong in PMIC, Auto, 5G and etc.
For the continuous 8” demand, the clients have high willingness to sign up an LTA (long term agreement), which explains the strong demand situation now.

Recent IPO Insights: Xometry

By Aaron Gabin

Two-Sided online marketplace connecting buyers and sellers. But is this more Amazon or Angi?
Game changing acquisition in December of Thomas should turbocharge growth and margins for 2022-2023.
At 4x sales, this is a very high growth asset that has been crushed since IPO, down 55%. Interesting entry point.

Before it’s here, it’s on Smartkarma

Mar 22

Health Care: Celltrion Inc, Arrail Group, Jiangsu Recbio Technology, PHC Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Celltrion and Celltrion Health Placement – Past Deals Have Been Mixed
Block Deal Sale of Celltrion & Celltrion Healthcare by ION Investment
Arrail Group (瑞尔集团) IPO Trading: Weak Demand, Rich Valuation
RecBio (江苏瑞科) IPO: Fairly Valued on Optimistic Industry Forecast
PHC Holdings (6523 JP): Eyeing a Bigger Pie of Global Diabetes Management Solution

Celltrion and Celltrion Health Placement – Past Deals Have Been Mixed

Temasek aims to raise around US$450m+ via selling 1.7% of Celltrion Inc (068270 KS) and Celltrion Healthcare (091990 KS) each.
We have looked at its two previous sell downs in 2018 and 2020.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

Block Deal Sale of Celltrion & Celltrion Healthcare by ION Investment

After the market close today, it was announced that ION Investment will partially sell its stakes in Celltrion and Celltrion Healthcare for about 560 billion won in a block deal.
The block deal price ranges are at 6 to 9 percent discount to current prices of Celltrion and Celltrion Healthcare.
We would take this take this deal due to settling of the accounting issue, more reasonable valuations, and sizeable block deal discount range.

Arrail Group (瑞尔集团) IPO Trading: Weak Demand, Rich Valuation

By Ke Yan, CFA, FRM

Arrail Group raised HKD 589.9 million (USD 75m) from its global offering and will list on the Hong Kong Stock Exchange on Tuesday, Mar 22nd.
In our previous notes, we looked at the company’s background, its operation, its financials, and its expansion plan, compared its key metrics with peers and provided thoughts on valuation.
In this note, we look at the updates since our last note and prior to debut.

RecBio (江苏瑞科) IPO: Fairly Valued on Optimistic Industry Forecast

By Ke Yan, CFA, FRM

RecBio is an innovative vaccine company with a focus on HPV vaccines. The company started book building to raise up to USD 98m via a Hong Kong listing.
In the previous note, we looked at the company’s core products, including its HPV portfolio and the COVID-19 vaccine and the valuation.
In this note, we provide an update for the book building. We will run the deal through our ECM framework and provide an update on the deal.

PHC Holdings (6523 JP): Eyeing a Bigger Pie of Global Diabetes Management Solution

By Tina Banerjee

PHC Holdings (6523 JP) is a diversified healthcare company, which serves ~$25 billion broader end-market, of which global glucose monitoring is the largest end-market.
The company’s diabetes management business is the highest margin earning segment and is poised to grow through expanding presence in continuous glucose monitoring system.
PHC can be an early investment idea as a passive play on the fastest growing segment of the global diabetes management segment ahead of its global launch of next-generation CGM.

Before it’s here, it’s on Smartkarma

Mar 22

Equity Bottom-Up: Pinduoduo, Alibaba Group, China Power International, Premier Anti-Aging, ASICS Corp, Vanguard Intl Semiconductor, PHC Holdings, Xometry and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

Pinduoduo (PDD): 4Q21, Undervalued Growth Rate and Record Profit Since IPO, Buy
US Expansion of Travel Bans the First Step in Broader Escalation?
China Power International (2380 HK): Transformation to Soon Bear Fruits
Premier Anti-Aging Company: Getting to an Interesting Level
ASICS (7936): Time for a Bounce
Vanguard (5347.TT): We Think Vanguard Can Easily Reach 1Q22 Guidance.
PHC Holdings (6523 JP): Eyeing a Bigger Pie of Global Diabetes Management Solution
Recent IPO Insights: Xometry

Pinduoduo (PDD): 4Q21, Undervalued Growth Rate and Record Profit Since IPO, Buy

By Ming Lu

PDD’s total revenue growth was low 4Q21, as the company gave up on direct sales.
However, we believe the revenue growth will bounce back in 2023.
PDD cut sales and marketing expense, so we believe operating margin will improve in following two years.

US Expansion of Travel Bans the First Step in Broader Escalation?

The US just expanded travel bans against Chinese officials said to be repressing ethnic and religious minorities.
The timing, a few days after a Biden-Xi call on Russia that appeared to achieve little of substance is telling.
Noises out of the UK have been similarly aggressive here and the question now is how Europe responds.

China Power International (2380 HK): Transformation to Soon Bear Fruits

By Osbert Tang, CFA

2H21 is bad for China Power International (2380 HK) as coal price surged. But the positive news is that its wind and solar segments logged a 50.6% full-year profit growth.
There is good progress on transformation and it has 7GW of clean energy capacity to come on stream in FY22. This is equivalent to 46% of the existing capacity.
CPI said coal-fired plants are marginally profitable in Jan-Feb; meanwhile, hydropower will do better in this year. Overall, these set the stage for a turnaround.

Premier Anti-Aging Company: Getting to an Interesting Level

By Oshadhi Kumarasiri

We last wrote on this relatively small Japanese cosmetics company in September 2021 suggesting that it could be worth keeping an eye on given its cheaper valuation compared to peers.
Premier Anti-Aging (4934 JP) shares are down 80% from the peak, mostly because it was sold-off alongside the low quality names in Mothers.
It seems early to turn outright bullish on Premier Anti-Aging yet. However, if you are short other unprofitable names in Mothers, we think Premier Anti-Aging is a sensible long hedge.

ASICS (7936): Time for a Bounce

By Mark Chadwick

Demand for ASICS running shoes remains strong. That should become clear as factories reach full capacity and shipping problems recede.
Profit margins will expand due to less discounting and an improved channel mix.
We turn bullish following a 30% decline from 52-week high. The stock is now trading at undemanding multiples versus peers.

Vanguard (5347.TT): We Think Vanguard Can Easily Reach 1Q22 Guidance.

By Patrick Liao

It’s NTD$4.976~5.176bn to go in March to reach the 1Q22 guidance of NTD$13.2~13.6bn.
Despite Consumer and Smartphone demands could be weak in 1Q because of seasonality, we still see the demands can be strong in PMIC, Auto, 5G and etc.
For the continuous 8” demand, the clients have high willingness to sign up an LTA (long term agreement), which explains the strong demand situation now.

PHC Holdings (6523 JP): Eyeing a Bigger Pie of Global Diabetes Management Solution

By Tina Banerjee

PHC Holdings (6523 JP) is a diversified healthcare company, which serves ~$25 billion broader end-market, of which global glucose monitoring is the largest end-market.
The company’s diabetes management business is the highest margin earning segment and is poised to grow through expanding presence in continuous glucose monitoring system.
PHC can be an early investment idea as a passive play on the fastest growing segment of the global diabetes management segment ahead of its global launch of next-generation CGM.

Recent IPO Insights: Xometry

By Aaron Gabin

Two-Sided online marketplace connecting buyers and sellers. But is this more Amazon or Angi?
Game changing acquisition in December of Thomas should turbocharge growth and margins for 2022-2023.
At 4x sales, this is a very high growth asset that has been crushed since IPO, down 55%. Interesting entry point.

Before it’s here, it’s on Smartkarma

Mar 22

Macro: China: Major Policy U-Turn Underway and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

China: Major Policy U-Turn Underway
China A-Shares: Powering to New Highs
Seeking El Dorado
The MAD Report – Cross Market Analysis
The Week That Was in ASEAN@Smartkarma – Astra’s Future, Matahari Dept Store on Form, and GoTo’s IPO
CX Daily: China’s Covid Response Calibration

China: Major Policy U-Turn Underway

By Nigel Chiang

Vice-Premier Liu He convened a rare policy meeting to signal a significant policy “U-turn” that paves the way for more concerted pro-growth policies to be introduced soon.
The recalibration of policy reflects behind-the-scenes pushback on the broad direction of economic policy undertaken by President Xi since the start of 2021.
Expect higher policy risks in the medium-term as regulatory excesses over the past year are unwound – with the possibility of a renewed crackdown once growth is on surer footing.

China A-Shares: Powering to New Highs

By Steven Holden

China A-Shares allocations continues to grow among active EM investors. Average holding weights sit close to all-time highs of 5.60%, with a record 87.8% of funds invested
Over the past 6-months, EM investors have made a clear rotation in to A-Shares, with all measures of ownership moving higher vs country peers. Growth investors are the key allocators
Ecovacs Robotics Co Ltd and East Money Information have seen ownership levels double, whilst CATL and Midea Group remain the most widely held stocks.

Seeking El Dorado

By Market Sentiment

Over the past 20 years, tech (QQQ) has given 2x the return of the S&P 500 while almost having a similar risk profile and max drawdown.
While not all of us can leave our jobs to follow a fast-growing trend, something we can do is invest in such companies/industries
The price of lithium-ion batteries has fallen more than 97% in the last 3 decades. It is in ubiquitous use, in everything from our phones to electric cars

The MAD Report – Cross Market Analysis

By Shyam Devani

Fixed Income markets have stabilised after the Fed including the relentless rise in short end (2Y) yields. Short term Bonds are not a sell
Equity markets have also stabilised with positive short term price action while there are too many bears
The USD has stabilised and showing early signs of a slip (ex USDJPY). Watch the price action

The Week That Was in ASEAN@Smartkarma – Astra’s Future, Matahari Dept Store on Form, and GoTo’s IPO

By Angus Mackintosh

The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
The past week saw insights on Astra International (ASII IJ) as it hatched its future plans, and on Matahari Department Store (LPPF IJ) as it enters a new growth phase.
There were also a number of insights looking at the upcoming GoTo IPO, which may not measure up on valuations but there is probably more there than meets the eye.

CX Daily: China’s Covid Response Calibration

By Caixin Global

Covid-19 / Cover Story: China’s Covid response calibration.
Markets / In Depth: Chinese stocks’ wild ride.
China-U.S. / Xi Jinping calls for China and U.S. to share responsibilities for world peace.

Before it’s here, it’s on Smartkarma

Mar 22

South Korea: Celltrion Inc, Samsung Sds, CJ ENM, KakaoBank and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Celltrion and Celltrion Health Placement – Past Deals Have Been Mixed
Samsung SDS Placement – Deal Is Very Well Flagged and the Stock Is Cheap, but It’s a Tough One
WISE Media Contents (TIGER ETF) Rebalancing Preview
Block Deal Sale of Celltrion & Celltrion Healthcare by ION Investment
Block Deal Sale of Samsung SDS by the Lee Family to Pay for Inheritance Taxes
Krafton & KakaoBank: Potential MSCI Upweights in May

Celltrion and Celltrion Health Placement – Past Deals Have Been Mixed

Temasek aims to raise around US$450m+ via selling 1.7% of Celltrion Inc (068270 KS) and Celltrion Healthcare (091990 KS) each.
We have looked at its two previous sell downs in 2018 and 2020.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

Samsung SDS Placement – Deal Is Very Well Flagged and the Stock Is Cheap, but It’s a Tough One

Kookmin Bank Trust Department is looking to raise up to US$321m via selling 3.9% of Samsung SDS.
The deal appears to be very well flagged as the ultimate sellers are the Samsung family.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

WISE Media Contents (TIGER ETF) Rebalancing Preview

By Sanghyun Park

WISE Media Contents rebalances every quarter in January, April, July, and October. The effective date for the upcoming rebalancing is April 15.
The gap between the rebalancing weight change estimations based on the float-adjusted market caps and the actual implementation of the ETF operator (TIGER) is not significant.
Following stocks are worth paying attention: (Short) Jyp Entertainment, S.M.Entertainment, Studio Dragon, Jcontentree, and SBS Contents Hub / (Long) CJ ENM, DearU, D&C Media, Genie Music, and IHQ

Block Deal Sale of Celltrion & Celltrion Healthcare by ION Investment

After the market close today, it was announced that ION Investment will partially sell its stakes in Celltrion and Celltrion Healthcare for about 560 billion won in a block deal.
The block deal price ranges are at 6 to 9 percent discount to current prices of Celltrion and Celltrion Healthcare.
We would take this take this deal due to settling of the accounting issue, more reasonable valuations, and sizeable block deal discount range.

Block Deal Sale of Samsung SDS by the Lee Family to Pay for Inheritance Taxes

The Samsung Group owner Lee family wants to partially sell their stake in Samsung Sds worth 390 billion won in a block deal.
The block deal sale involves 3.02 million shares of Samsung SDS or 3.9% of outstanding shares.
We would avoid this block deal as the company may face continued overhang sale issue in the next 1-2 years.

Krafton & KakaoBank: Potential MSCI Upweights in May

By Brian Freitas

KakaoBank (323410 KS) is currently included in the MSCI Korea Index at a FIF of 20%. That could increase to 35% at the May SAIR.
Krafton Inc (259960 KS) is currently included in the MSCI Korea Index at a FIF of 45%. That could increase to 55% at the May SAIR.
We estimate passive MSCI trackers will need to buy US$222m of KakaoBank (323410 KS) and US$83m of Krafton Inc (259960 KS) at the close on 31 May.

Before it’s here, it’s on Smartkarma

Mar 22

India: UPL Ltd, Navi, Hindustan Unilever and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

UPL Limited – Tear Sheet – Lucror Analytics
Navi Technologies Pre-IPO – The Positives – Sold the First for US$20bn, Now Building One Without VCs
Pick of the week – HUL

UPL Limited – Tear Sheet – Lucror Analytics

By Trung Nguyen

We view UPL Limited as “Low Risk” on the LARA scale, mainly due to the company’s robust business profile. UPL has global scale, being the fifth-largest generic agrochemical company in the world and the largest player in the post-patent segment. The industry enjoys reasonable pricing power and profitability due to the high barriers to entry, namely: [1] regulations; [2] the years-long registration process; and [3] the sales and distribution network. Geographical exposure is diversified, with 40% of UPL’s 9M/21-22 revenues derived from LatAm, 14% each from North America and Europe, 17% from Rest of the World and 14% from India, which accounts for 40-50% of total volume production. Thus, the company’s ratings are not limited by India’s sovereign rating.

On the flip side, the credit profile is weighed down by: [1] UPL’s seemingly aggressive financial policies and appetite, as seen in the USD 4.2 bn acquisition of Arysta LifeScience in 2019; and [2] the below-par financial metrics for the BBB ratings, albeit these are improving rapidly. There is event risk from either another potential major acquisition or UPL’s buyout of TPG and ADIA’s stakes (11% each) in subsidiary UPL Corp, which would increase leverage.

Our Credit Bias on UPL is “Stable”, as the robust business profile, strong FCF generation and improving financial metrics should help the company weather the volatile environment stemming from the Russia-Ukraine war.

Navi Technologies Pre-IPO – The Positives – Sold the First for US$20bn, Now Building One Without VCs

Navi Technologies (NT) aims to raise around US$500m in its India listing. NT was started by Sachin Bansal, co-founder of Flipkart which was sold to Walmart in 2018.
NT is a technology-driven financial products and services company. The company was only incorporated in 2018, it offers personal loans, home loans, general insurance and mutual funds.
In this note, we will talk about the positive aspects of the deal.

Pick of the week – HUL

By Edelweiss

HUL, the largest FMCG player in India, was formed by merging three subsidiaries of Unilever in 1956.
HUL’s portfolio of products covers a wide spectrum including soaps, detergents, skin creams, shampoos, toothpastes, tea, coffee, packaged foods and branded atta
Powerful brands and an envious distribution network are its primary strengths

Before it’s here, it’s on Smartkarma

Mar 22

Financials: Hong Kong Hang Seng Index, KakaoBank, Apollo Strategic Growth Capital, Solana, Navi, Bank Negara Indonesia Persero, Bank Rakyat Indonesia Persero, Bank Tabungan Negara Persero, Bank Danamon Indonesia, Bank Central Asia and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

HSI Short for a Give Back
Krafton & KakaoBank: Potential MSCI Upweights in May
This Deal Will Reshape The Future of Corporate Travel
Getting Started With Solana
Navi Technologies Pre-IPO – The Positives – Sold the First for US$20bn, Now Building One Without VCs
Bank Negara Indonesia (BBNI.JK) – Building On Enhanced Fundamentals
Bank Rakyat Indonesia (BBRI.JK) – Defensive At Reasonable Price
Bank Tabungan Negara (BBTN.JK) – Priced In But No Immediate Catalyst
Bank Danamon (BDMN.JK) – Trading At Below Fair Value
Bank Central Asia (BBCA.JK) – Scarcity Of Roe Booster

HSI Short for a Give Back

By Thomas Schroeder

HSI’s short squeeze spike is due for a pullback to the 20,200 to 19,700 support. We liked layering into a short near 21,700-22,500 for a pullback.
RSI kissed the ideal sell barrier. Sell volumes on a slip as well as buy volumes on a reaction rise will shed light on participation/repositioning.
Short for a pullback with a second trade to buy the sub 20k zone for a reaction rise.

Krafton & KakaoBank: Potential MSCI Upweights in May

By Brian Freitas

KakaoBank (323410 KS) is currently included in the MSCI Korea Index at a FIF of 20%. That could increase to 35% at the May SAIR.
Krafton Inc (259960 KS) is currently included in the MSCI Korea Index at a FIF of 45%. That could increase to 55% at the May SAIR.
We estimate passive MSCI trackers will need to buy US$222m of KakaoBank (323410 KS) and US$83m of Krafton Inc (259960 KS) at the close on 31 May.

This Deal Will Reshape The Future of Corporate Travel

By subSPAC

When American Express Global Business Travel announced that it was going public through a SPAC merger with Apollo Global Management at $5.3 billion, the industry was split
While some lauded the move as a way to capitalize on the rebound in travel & industry consolidation, others questioned the timing of the deal and the long-term outlook of the market
With so many uncertainties surrounding the future of work, new waves of the pandemic, and general business outlook, enthusiasm about the deal is muted

Getting Started With Solana

By Etherbridge

Solana meaningfully appeared on the scene in 2021 and experienced an explosive rise as it positioned itself as the ultimate Ethereum killer.
Solana is a layer 1 smart contract platform that is very similar to Ethereum in that it can power a wide variety of applications; these can be anything from DeFi to Web3.
Solana was created in 2017 by Anatoly Yakovenko with a focus on high-throughput and low fees.

Navi Technologies Pre-IPO – The Positives – Sold the First for US$20bn, Now Building One Without VCs

Navi Technologies (NT) aims to raise around US$500m in its India listing. NT was started by Sachin Bansal, co-founder of Flipkart which was sold to Walmart in 2018.
NT is a technology-driven financial products and services company. The company was only incorporated in 2018, it offers personal loans, home loans, general insurance and mutual funds.
In this note, we will talk about the positive aspects of the deal.

Bank Negara Indonesia (BBNI.JK) – Building On Enhanced Fundamentals

Time to start collecting
Gaining market share
Well-guarded quality
ROE uptrend here to stay

Reiterate BUY on BBNI with TP of IDR9,600 based on 13.5% FY22-24E average ROE, implying 1.3x FY22E P/BV. Low funding cost and ample liquidity has enabled the bank to compete with bigger peers and gain 200bps loan market share since 2015. At the same time, BBNI is moving to mitigate risk and refocusing expansion into higher-quality sectors. Yet it is trading at only 1.1x FY22E P/BV, making BBNI one of the best value-growth combinations within our coverage.

Bank Rakyat Indonesia (BBRI.JK) – Defensive At Reasonable Price

Advantages priced in
Supported by micro lending
Largest scope to absorb risk
Higher liquidity needed

We upgrade BBRI to HOLD with TP at IDR4,600 based on 15.6% FY22-24E average ROE, implying 2.3x FY22E P/BV. The stickiness of its micro franchise and the steps taken to mitigate risk should limit the downside for earnings. Valuation is fair even after factoring in challenging near-term funding growth, margin, and asset-quality dynamics. This, in our opinion, leads to a balanced risk-return trade-off for the stock.

Bank Tabungan Negara (BBTN.JK) – Priced In But No Immediate Catalyst

Muted ROE expansion
Sensitive to funding cost
Credit cost to remain elevated
In need of capital raising

We downgrade BBTN to HOLD with TP at IDR1,800 based on 11.8% FY22-24E average ROE, implying 0.8x FY22E P/BV. We think expansion in mortgages will remain limited by funding and capital constraints despite the resilient source of demand in the mid-low end housing segment. This results in a relatively flat medium-term ROE outlook. Hence, despite the discounted valuation, we see limited upside from current valuation.

Bank Danamon (BDMN.JK) – Trading At Below Fair Value

Testing business model
Tough competition
Margin expansion likely to stall
Still benefitting from cleaner balance sheet

Reiterate BUY on BDMN with TP of IDR2,700 based on 6.0% FY22-24E average ROE, implying 0.6x FY22E P/BV. The collaboration with MUFG will continue to act as a growth driver for BDMN. While the new wholesale-funded lower-yield business model of the bank will still be tested over the medium term as competition in the sector is likely to intensify, we see upside to profitability from lower credit cost outlook.

Bank Central Asia (BBCA.JK) – Scarcity Of Roe Booster

Unwarranted premium
Underutilized deposit franchise
Fading superiority in quality
Narrowing ROE gap with peers

Reiterate SELL on BBCA with TP of IDR6,400 based on 17.8% FY22-24E average ROE, implying 3.6x FY22E P/BV. Current premium valuation of 4.5x for the stock over peers’ 1.7x average reflects high expectations. However, we see a disconnect between BBCA’s fundamentals and premium valuation given its fading superiority in ROE, NPL and LLC, all of which are unlikely to show swift recovery.

Before it’s here, it’s on Smartkarma

Mar 22

Industrials: Toshiba Corp, Qube Holdings, Berjaya Corp, Trinity Industries and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Toshiba – The New CEO And The Company Culture
Qube Holdings BIG (7+%?) Off-Market Buyback
BJCORP Update – Is Jalil Resigning as CEO of BJCORP?
Weekly Stock Bullfinder – Week of 3/21

Toshiba – The New CEO And The Company Culture

The Nikkei had an interesting article today on Toshiba’s new CEO and the company’s underlying culture.
It addresses some inconsistencies we have seen in terms of demonstrated competence at lower levels vs. a certain lack thereof at the top.
Ultimately though we suspect that what it reveals points to a lower chance of a privatisation

Qube Holdings BIG (7+%?) Off-Market Buyback

By Travis Lundy

Qube Holdings (QUB AU) saw a near 5% block sold Friday after the close at a small discount – likely the long-awaited CPPIB cleanup trade.
This morning, the company announced a A$400mm off-market buyback, with record date 29 March, giving appropriate investors time to build a position.
This should be something like 7.2-7.8% buyback, leading to 7.5-8.5% EPS accretion for 2023.

BJCORP Update – Is Jalil Resigning as CEO of BJCORP?

By Value Investing

My favorite stock by far in the present day is BJCORP, it had a minimum upside of 300% within 5 years with relatively little risk
BJCORP’s new CEO Jalil was able to articulate the importance of optimal capital allocation in his 3-year turnaround strategy
However, in a surprising turn of events, it was announced in yesterday’s local financial news that Jalil would be stepping down as CEO of BJCORP.

Weekly Stock Bullfinder – Week of 3/21

By Weekly Stock Bull Finder

Last week was a strong bounceback week for the S&P 500 index as it closed back over its 10WK moving average and finished the week up over 6%
Technology and growth stocks were particularly strong on Thursday and Friday after Wednesday’s Fed meeting and closely followed yield curves already have inverted or are close to inverting
In addition, many beaten down growth stocks saw strong moves higher as short covering occurred going into options expiration last week

Before it’s here, it’s on Smartkarma

Mar 22

Japan: Toshiba Corp, Premier Anti-Aging, ASICS Corp, PHC Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Toshiba – The New CEO And The Company Culture
Premier Anti-Aging Company: Getting to an Interesting Level
ASICS (7936): Time for a Bounce
PHC Holdings (6523 JP): Eyeing a Bigger Pie of Global Diabetes Management Solution

Toshiba – The New CEO And The Company Culture

The Nikkei had an interesting article today on Toshiba’s new CEO and the company’s underlying culture.
It addresses some inconsistencies we have seen in terms of demonstrated competence at lower levels vs. a certain lack thereof at the top.
Ultimately though we suspect that what it reveals points to a lower chance of a privatisation

Premier Anti-Aging Company: Getting to an Interesting Level

By Oshadhi Kumarasiri

We last wrote on this relatively small Japanese cosmetics company in September 2021 suggesting that it could be worth keeping an eye on given its cheaper valuation compared to peers.
Premier Anti-Aging (4934 JP) shares are down 80% from the peak, mostly because it was sold-off alongside the low quality names in Mothers.
It seems early to turn outright bullish on Premier Anti-Aging yet. However, if you are short other unprofitable names in Mothers, we think Premier Anti-Aging is a sensible long hedge.

ASICS (7936): Time for a Bounce

By Mark Chadwick

Demand for ASICS running shoes remains strong. That should become clear as factories reach full capacity and shipping problems recede.
Profit margins will expand due to less discounting and an improved channel mix.
We turn bullish following a 30% decline from 52-week high. The stock is now trading at undemanding multiples versus peers.

PHC Holdings (6523 JP): Eyeing a Bigger Pie of Global Diabetes Management Solution

By Tina Banerjee

PHC Holdings (6523 JP) is a diversified healthcare company, which serves ~$25 billion broader end-market, of which global glucose monitoring is the largest end-market.
The company’s diabetes management business is the highest margin earning segment and is poised to grow through expanding presence in continuous glucose monitoring system.
PHC can be an early investment idea as a passive play on the fastest growing segment of the global diabetes management segment ahead of its global launch of next-generation CGM.

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